1 comment:

The Economist article was an interesting read. The EIU's recent article published in The Economist went further, and even differed somewhat with that view. It said that regulation needs to be liberalised still further. A bold thing to be saying right now, but they were not advocating increased integration or full convertibility.

What they were saying was that directed lending be eliminated or at the very least scaled back, so for a start public sector banks which dominate the landscape in terms of deposits can increase corporate lending, there would be a lot less NPL's and domestic corporate bond markets could develop instead of being eclipsed by the market for government debt which seems to crowd out private borrowers, making companies rely on equity markets or ECB's for capital raising.

If that had been the case perhaps Indian banks and borrowers would not have been caught short, like you say in that article.

They suggested that NBFC's which weren't subjected to such regulations were in a better position to benefit over the long haul, which differs substantially from what that piece say's.

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